Forewarned: Love Doesn't Always Last Forever
When Nancy met Jeffrey Facter she was a part-time shoe salesperson at a
Nordstrom's Department Store. She was the mother of two small children,
and in the process of getting a divorce from the children's father.
They fell in love, and Jeffrey began providing for Nancy's financial
needs. He bought a house for Nancy and her children to live in and gave
her money for expenses. She hated selling shoes and wanted to be a real
estate agent. So, he paid for the real estate schooling allowing her to
obtain her real estate license. Jeffrey wanted something too. He wanted
to be a father. Nancy told him she would not give him any children unless
they got married first. Jeffrey was a lawyer on a career fast track. He
had graduated from Harvard Law School and was just about to make partner
at the law firm he worked at. He was afraid that if he married, he could
lose everything he had worked hard for if his marriage ended in divorce.
He agreed to marry Nancy, but only if she signed a premarital agreement.
He then wrote an agreement for Nancy to sign. The agreement called for
the earnings of the parties to be their separate property and co-mingled
assets would be community property. If there were a divorce, each party
would pay his/her own attorney's fees and costs, and if there were
children from the marriage, Jeffrey would pay a set fee in child support.
Nancy would receive no spousal support, but approximately $200,000 at
the time of the divorce, a Jaguar car and all of the home furnishings.
After having the agreement explained to her by two separate attorneys
of her own choosing, Nancy signed the agreement and married Jeffrey. They
had one child together, and while Jeffrey continued to go up the corporate
ladder of success, Nancy never worked another day.
Fifteen years later, the marriage ended and they filed for divorce. Jeffrey
asked the court to honor the terms of the premarital agreement, and Nancy
asked the court to throw the agreement out because it was illegal and
unfair. At trial, the judge threw out the premarital agreement saying
that it was illegal because, by law, no one can agree to child support
in a premarital agreement, and because the terms were so unfair to Nancy.
Before the judge could make a judgment without the premarital agreement
in effect, Jeffrey appealed.
The appellate court agreed with Nancy in part, and agreed with Jeffrey
in part. The trial court was right about the illegality of the child support
portion of the premarital agreement (courts determine child support),
but that did not mean the rest of the document was invalid. Nancy received
advice from two separate lawyers who told explained the documents to her.
Although she was a high school graduate and Jeffrey was a lawyer, it did
not mean that she could not understand what she was signing – especially
if she had experts explain the document to her. Therefore, the portion
of the document keeping their earnings separate was valid, and she was
only entitled to whatever property had her name on it as well as Jeffrey's
(such as, the house and a few bank accounts). A person can also waive
the possible right to spousal support, but in Nancy's case, the court
found the terms so unfair as to be against public policy. At the time
of the agreement, Jeffrey was worth about $3,000,000. Nancy had no money
or assets of her own. At the time of trial, Jeffrey had $10,000,000 in
assets, and Nancy would receive about $1,000,000 from her share of the
community property and the $200,000 from the premarital agreement. So
court awarded her spousal support too.
A premarital agreement can be very important for someone about to married
if that person needs to protect assets or financial stability in the event
of divorce or death. However, these agreements are so technical that they
should always be written by an expert in writing premarital agreements.